Take the Guesswork Out of Your Hotel Pricing Strategy


By Cloudbeds | Published on March 11, 2019

Hoteliers and hosts are always on the lookout for new ways to maximize revenue, but achieving peak earnings requires the implementing right hotel pricing strategy at the right time. In fact, the key to your success could be making room rate adjustments based on demand and customer segmentation in conjunction with other strategic changes.

If you’d like to learn the basics of developing strategic rate plans and pricing, download a copy of our extensive guide: The Secret Strategies to Rate Plans and Hotel Pricing.

Let’s dive into other key factors that will help you take the guesswork out of your hotel pricing strategy.


What to consider when developing your hotel’s pricing strategy

  1. Property Location
  2. Target Market
  3. Level of competition
  4. Property Size
  5. Services offered
  6. Upsell opportunities

The first step to creating successful pricing strategies in the hotel industry is to understand the market and meet its demands. You also need to be aware of your guests’ demographics and their needs and expectations.

When it comes to understanding your guest demographic, it’s imperative that you have a clear understanding of where your demand comes from and the specific factors that play a role in the seasonal demand of your hotel. For example, do you notice that you get more business travelers demanding single rooms during the winter months and families requesting suites in the summer? You can refer to your PMS reports to give you a clearer view of your customer demographics data. Another tactic is to use Google Analytics to track business and segments coming to your website.

Beyond understanding your own market, you need to observe the competition that exists within your market. Your competitors should be a part of what drives your hotel pricing strategy and decision-making process with regards to nightly rates, discounts, and advertising. You can start by analyzing your top competitors, and researching everything from their location, amenities, accommodations, and prices. Make sure to shop their prices regularly to see what offers/promotions they’re running and when they increase or drop their rates.

Always know your competition and their room rates. An increase in their prices could mean that you need to adjust your rates accordingly. Also, keep an eye out for an increase in demand and a lack of inventory in competitor properties as this could indicate an opportunity for you to adjust your pricing as well. For deeper insight into your market, competition, and your property’s performance (including segmentation of your business) – use you can use hotel pricing software.


Hotel pricing types

There is no one pricing strategy that will work for every property. Instead, it’s recommended that you utilize a combination of different strategies depending on your market’s trends, revenue goals, and targeted demographic. Here are some hotel pricing strategy examples you might want to try out at your property.

1. Open Pricing

Open Pricing is an ideal option for hotels operating independently. Essentially, Open Pricing involves setting rates for channels, room types, and dates that are independent of each other. This luxury of choice allows hotels to forecast more accurately.

2. Value-Added Pricing

With this pricing strategy, your room rate can be set higher than the local competition because you’ll be offering more extras in the basic package (ie. organic soaps/shampoos, or other package inclusions). The extra perks can be services or items.

3. Discount Pricing

This approach is used to boost occupancy during slow seasons by dropping base rates. Although you will be dropping your base rates for the lean season, hotel revenue can be made up through other items and services at the property.

4. Price Per Segment Pricing

This strategy involves offering the same product at different prices depending on the different types of customers. With this pricing, your rates can be lower if the guest commits to either booking a certain number of rooms or a specific length of stay.

5. Length of Stay Pricing

This strategy consists of adjusting your pricing based on the length of the stay. You can implement a rule where guests who stay a minimum number of days will receive a discount. A promotion like this helps you to build occupancy on slow nights and increase your occupancy during lean periods.

6. Positional Pricing

This is a strategy where your price is based on your brand’s strength, position in the market, and reputation. Positional Pricing makes it highly important to assess and choose your brand’s market position wisely.

7. Penetration Pricing

One of the hotel industry pricing strategies used during the initial offering period. This initial lower pricing period allows you to penetrate the market and attract customers away from your competitors.

pricing and rate plans in the hotel industry


What are Rate Plans and why hotels use them?

Jeremee Peters, Cloudbeds Connectivity Manager, explains how hotel rate plans work, their attributes, and how they help properties generate more bookings.


Hotel pricing best practices

After you’ve determined your pricing strategy or combination of strategies you may want to implement, it is important to continuously monitor market demands and your competitors’ pricing to remain competitive. Here are some best practices. 

Maximize midweek bookings

An often-overlooked pricing strategy at hotels is to increase midweek bookings. There are many ways to do this, however, it’s not as simple as just dropping rates. While this may attract more business, it won’t be good for the long-term health of your business.

Look to add value for your clients. Create packages and use clever distribution techniques. Here are some ideas for where to start:

  • Create an email marketing plan utilizing previous guest data in an effort to attract repeat guests
  • Take advantage of reservations made Friday through Sunday and offer an extended stay of one or two nights at a lower room rate
  • Develop relationships and collaborate with other local businesses to offer special promotions and giveaways for a midweek stay
  • Offer special packages and discounts to midweek guests
  • Capitalize on local midweek events by promoting your hotel as the best place to stay. You can even create a social media post using the event’s hashtag to get more visibility

For example, the hotels in the Temecula Wineries destination collectively participate in midweek and weekday hotel deals as an incentive to attract more guests to the area. Each hotel is then responsible for creating its own special offer.

hotel pricing strategy


Run effective promotions

One way to get ahead of your competition when demand is low is by using promotions, discounts, and special deals. When demand is slowing down, these deals can be used to attract more bookings.

By offering things like spa or restaurant incentives, hotel room discounts, multiple-night discounts, free nights, etc. you can start to get ahead of the game. By adding these short promotional bursts into your hotel pricing strategy, you’ll gain some traction in bookings and avoid your hotel being perceived as low-quality or constantly discounting.

As an example, hotel FieldHouse Jones even offers discounts and evening events at its onsite cafe, restaurant, and slot car racing space. This way, they are not only dependent on guests for an inflow of hotel revenue, but they also bring in added profits from the local community. This tactic also has the added benefit of providing guests with the feeling of an authentic travel experience since they get to intermix with the local community; it’s a win-win for everyone.


Sell last-minute inventory

Technology has done a lot for the hotel industry, in fact, recent statistics show that up to 80% of last-minute bookings are made on mobile devices. This trend represents a huge opportunity for hotels to set a hotel pricing strategy right up until the last possible minute.

The best way to sell off these last-minute rooms is through a pooled inventory system via a channel manager. This creates a seamless two-way connection to your hotel’s various booking sites, like, Expedia, or Airbnb, and ensures that the constant flow of information is reliable and up to date.

Additionally, by monitoring your competitor’s rates in real-time, you will be able to make informed hotel pricing decisions to ensure those final rooms are sold without compromise.


Make data-based decisions

In the fast-paced hotel industry, having real-time data can mean the difference between getting ahead of your competition or being left in their dust. Without a PMS system that provides reliable, real-time data on your guests and business, you won’t be able to track the information that’s crucial to building a successful hotel pricing strategy. Having the most up-to-date data at your fingertips allows you to assess the level of live demand in the market so that you can react faster and more accurately.


Use technology to enhance your hotel pricing strategies

The right strategy is necessary to create healthy profit margins and continued revenue growth for your business. Cloudbeds can help you create the right pricing strategies with our Pricing Intelligence Engine (PIE). PIE is an easy-to-use tool that streamlines complicated hotel pricing decisions using real-time market data. With competitive intelligence and an all-in-one dashboard, PIE can help you make the right pricing choices.

loading background.

About Cloudbeds


Cloudbeds is the fastest growing hospitality management software suite in the world, providing tools to manage properties of all types and sizes – building revenue, driving bookings and increasing operational efficiency. Trusted by more than 20,000 hotels, hostels, inns, and alternative accommodations in more than 155 countries, the Cloudbeds suite includes a powerful PMS, a leading Channel Manager, and a conversion-driven Booking Engine. Through access to 300+ integrations available via the marketplace, Cloudbeds helps properties unify their management, reservations and booking systems, grow revenue and automate workflows with confidence and ease. Founded in 2012, Cloudbeds has expanded to more than 400 people with local teams in 40 countries. 

Get bright ideas and best practices delivered straight to your inbox

Effective Email Communication for Hospitality [+ Free Templates]

The dos and don’ts of email communication in hospitality.
Get the eBook
One platform designed to help hoteliers build revenue, save time and increase guest satisfaction.

You might also be interested in...


Facing a labor shortage at your property? Here’s how technology can help


Cloudbeds Launches Websites, A Complete Website Design and Development Solution


Katanox partners with Cloudbeds

Web Beacon